USD 4+ Bn Market Surging at 12% CAGR: India’s Agrochemicals Contract Manufacturing booming

The Indian agrochemical industry has witnessed significant growth in recent years, driven by rising food demand and the growing adoption of modern farming techniques. India is currently the fourth-largest producer of agrochemicals globally, with the market expected to expand from $7.90 billion in FY2023 to $12.58 billion by FY2028, achieving a CAGR of 9.75%. Furthermore, India became the second-largest agrochemical exporter in the world, following China, with exports reaching $5.5 billion in Fiscal Year 2022-23 (FY2023), up from $2.6 billion in FY2017. 

However, FY2024 saw muted global demand, excess inventories and oversupplies from China. All this led to price erosion and volume decline for the Indian exporters in markets like LATAM & USA. 

 Total AgroChem Export (FY2024): $4.8 bn

 Formulation Export (FY2024): $2.6 bn

 Technical Export (FY2024): $1.7 bn

 CRAM/CSM (Innovator only) Export (FY2024): $0.5 Bn

 Strong Chemistries: Synthetic Pyrethroids, Organophosphates, Triazoles, Mancozeb, etc.

 Strength: Lower labour cost and preferred supply partner to USA & Japanese players

 Weakness: Higher import dependency of key raw materials and lower R&D spend

(*FY= Fiscal Year in India)

(**CRAM = Contract Research and Manufacturing)

(***CSM = Custom Synthesis and Manufacturing)

Current Landscape and Growth Drivers

India’s CRAM (Contract Research and Manufacturing)/CSM (Custom Synthesis and Manufacturing) sector in agro-chemicals, is expected to grow at around 12% CAGR from 2024-2029 due to favourable government policies (make-in-India), a skilled workforce, and the growing influence of Indian players in the Western & European markets in the post-pandemic era. However, addressing challenges related to R&D investment, infrastructure, and supply chain integration are crucial. 

CRAM players focus upon off-patented generic molecules using their capabilities to optimize the manufacturing process and reduce the production cost. CSM players on the other size, focus upon patented products that require more R&D efforts. In India, the key players (PI Industries, SRF, Deccan Fine Chem, Astec LifeSciences etc.) are active in both the CRAM and CSM spaces as they offer their services to global agrochemical supermajors (BASF, Syngenta, FMC, Corteva, Kumiai etc.).

The Indian CRAM + CSM market is around USD 4~4.5 Bn at current for agrochemicals. Some of the key growth drivers for this sector are listed below:

1. Increased opportunities from USA & Japanese Innovators

India’s share is just 0.7% with US & Japanese companies (innovators) offering immense potential to grow as they move away from China due to geopolitical risks. Lately we have been seeing increased outsourcing of molecules from ISK of Japan and FMC of USA to Indian players. The proposed US Bio-secure act for pharmaceuticals might get replicated in the agrochemicals sector as well in the coming year. This would prompt more and more US companies to partner up with manufacturers beyond China.

2. Off Patent Opportunities

16 technicals are getting off patented from the year 2024-2030 of which around 30-40% of the off-patent molecules will be taken up by generic manufactures. Around 60-70% are not adopted by the generic manufacturers due to lower market demand, limited applicability in crops and unavailability or lower capability to manufacture the advanced intermediates or intermediates.

Some of the large technicals which are up for the contract manufacturing by the innovators are listed below: 

 FLUBENDIAMIDE (BAYER; 2024 EXPIRY)

    Market Size (2024 estimated): USD 500 Mn

    Key Intermediate: 2-bromo-heptafluoroisopropane 

 PINOXADEN (SYNGENTA; 2026 EXPIRY)

    Market Size (2024 estimated): USD 450 Mn

    Key Intermediate: 1,4,5-Oxadiazepane dihydrobromide

 BENZOVINDIFLUPYR (SYNGENTA; 2028 EXPIRY)

    Market Size (2024 estimated): USD 420 Mn

    Key Intermediate: 3-(difluoromethyl)-1-methylpyrazole-4-carboxylic acid 

 SAFLUFENACIL (BASF; 2024 EXPIRY)

    Market Size: USD 300 Mn

    Key Intermediate: 2-chloro-4-fluoro-5-[3-methyl-2,6-dioxo-4-(trifluoromethyl)-3,6-dihydropyrimidin-1(2H)-yl]benzoyl

3. Moving Away from the ″Formulation Only″ Approach

Indian players till the year 2020 were mostly involved in ″formulation only″ approach where they would import intermediates and technicals heavily from China. But due to COVID19 the supply chains got disrupted which prompted a lot of Indian companies to get backward integrated in the agrochemicals value chain. This not only helped Indian players in having better visibility of the raw material supplies; it also made them better at cost competitiveness. 

Key Indian Players in the Global Contract Manufacturing Space

PI Industries

PI Industries Limited has established a solid advantage in the agrochemical contract manufacturing industry by building customer trust and harnessing its top-tier R&D capabilities. PI partners with leading global agrochemical companies to offer integrated services that range from early-stage research and process development to large-scale commercial production of technicals and intermediates. PI Industries has focused upon manufacturing both the patented as well as the generic technicals for a well-rounded clientele ranging from Europe to USA to Japan. 

Table 1: PI Industries’ main contract manufacturing products

From the current portfolio, Pyroxasulfone and Fluindapyr have been driving PI’s robust export revenue growth. The company is now focused on replicating its agrochemical success in new areas, including non-agrochemical molecules. In line with this strategy, PI has acquired two companies to broaden its scope into the pharmaceuticals and biologicals fields, aiming to develop a distinct global CSM platform. 

SRF

The company’s expertise in fluorine-based chemistry, coupled with stringent adherence to global regulatory standards, enables it to serve leading agrochemical players across the globe. However, despite having solid fluorination capabilities, SRF so far has limited itself to being a contract manufacture of generic intermediates for the agro-technicals. 

Table 2: SRF’s main contract manufacturing products

SRF’s majority of export revenue comes from these generic intermediates which are highly susceptible to price fluctuations. This creates a risk of continuous price erosion since these intermediates are readily available from multiple suppliers at a cheaper price. One such example is 3-Difluoromethyl-1-Methyl-1h-Pyrazole-4-Carboxylic Acid (DFMPCA) which is an intermediate going into multiple technicals. The price of DFMPCA was around USD 40-45/kg in the year 2023 while the current prices are hovering around USD 20-25/kg (from China). 

The company, however, is now slowly moving up ahead in the value chain with more focus on technicals manufacturing. SRF claims to be working on 4-5 promising technicals for both the innovators and generic manufacturers by leveraging its R&D facilities which can perform a diverse set of chemistries in a cost effective and efficient manner.

Astec LifeSciences

Astec Lifesciences' agrochemical contract manufacturing business focuses on providing end-to-end solutions for global agrochemical companies, offering services that include custom synthesis, process development, and large-scale manufacturing of intermediates and technicals. This contract manufacturing business allows Astec to build long-term partnerships and cater to the growing demand for agrochemicals worldwide. 

Table 3: Astec Lifesciences’ main contract manufacturing products

Summary

The Indian agrochemical contract manufacturing space has emerged as a critical global hub due to its cost competitiveness, strong chemical manufacturing expertise, and strong government support. Leading companies like PI Industries, SRF, and Astec LifeSciences offer custom synthesis, process development, and large-scale production of intermediates and technicals for global agrochemical giants. With a focus on complex chemistries and adherence to international regulatory standards, Indian manufacturers are forming long-term partnerships with global players. This sector is benefiting from increased outsourcing, as multinational companies seek to optimize supply chains and focus on innovation.

For more information, please contact Ajay Joshi at: joshi_advisory@outlook.com     WeChat: JoshiAjayChem

This story was initially published in the 2024 India Focus. Download the magazine to read more stories.

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